Millennials -- Once Viewed As Auto Market's Lost Generation -- Now Are Its Biggest Growth Driver

A few years ago, the prospect of American Millennials being the most important market for new cars was a case of Chicken Little. But now, the auto industry believes that Generation Y has grown into the goose that laid the golden egg.

It turns out that Millennials were responsible for all new-vehicle sales growth in North America during the first quarter of 2018, according to data compiled by Experian, the credit-information company. More specifically, Millennial market share increased to 29.7 percent during the period from 27.9 percent in the first quarter of 2017, while market shares from other generations remained unchanged or fell in the same period, when overall U.S. car sales were leveling off after an eight-year boom.

"The [Millennial] demographic is maturing and is now poised to be a driving force in automotive marketing," said Marty Miller, senior product marketing manager for Experian Automotive, in a blog post. "In short, they are growing up."

To recall: Just a few short years ago, automakers' fear of Millennials' predilections was one of the biggest bogeymen as they battled to recover from the Great Recession. At that point, many Millennials were showing much less than the traditional inclination for people their age to want to own a car or even to get a driver's license. At the same time, car- and ride-sharing services were emerging that met many of the automotive needs of single twenty-somethings without saddling them with big expenses. Another brick on the load was the difficulties that many Millennials were facing in coping with student debt and getting desirable jobs, two burdens that kept all too many of them in their parents' basements.

Thus, as Miller put it, the pundits said Millennials were "headed for an urban lifestyle where mobility depends on a tapestry of trains, buses and ride-share options."

Well, as Miller noted, it turned out that news of the auto market's death was vastly premature. "With an improved economy and several years in the workforce under their belts, more Millennials can afford a new vehicle," he said. "Additionally, almost half live in the suburbs."

And indeed, witness not only Millennials' vital contribution to the health of the U.S. auto market today but their outsized importance to some of the highest-profit segments, as the economic fortunes of Generation Y rise and they form more households and have more children. They're the driving force behind the success of vehicles such as the new version of the Ford Expedition, a hulking SUV, and overhauls of pickup trucks such as the Ford F-150, many of which are being put to use in Millennials' growing businesses.

Yet their demand crosses segments that make Millennials a vital cohort in all of them, especially in a market where automakers and dealers are scrambling to find pockets of growth. According to Experian data, the top 10 light-duty models purchased by Millennials in the first quarter were Honda Civic, Ford F-150, Chevrolet Silverado 1500, Toyota Camry, Toyota RAV4, Honda Accord, Ram 1500, Honda CR-V, Jeep Grand Cherokee and Nissan Rogue.

Interestingly, too, U.S. Millennials -- one of whose generational hallmarks is their concern about environmental sustainability -- showed about the same tepid level of interest as the general U.S. population in electric vehicles during early 2018. About 0.6 percent of their car purchases in the first quarter were electric; 2.4 percent, hybrids; and 2.5 percent, diesel, according to Experian, while more than 94 percent of all vehicles they purchased were fueled by gasoline.